WTP research is usually conducted by the business at best, or at worst by an external research firm without any context or continuity to see the research implemented.
UX research teams are well positioned to help the business determine if customers are willing to pay for that feature or product you want to build.
- Why WTP research is scary for many UX and product teams
- How to make WTP part of your continuous discovery practice
- How to involve all stakeholders in your product development for better outcomes.
[Transcript] Your UX Team Should Lead the Willingness to Buy Research with Alvaro Soto
Although transcriptions are generally very accurate, just a friendly reminder that they could sometimes be incomplete or contain errors due to unclear audio or transcription inaccuracies.
To continue all of the great content we’ve been listening to so far, we have Alvaro Soto. He’s the Director of Product Management at Procore. Alvaro believes that your UX team should actually lead the willingness to buy research at your organization, and I’m interested to hear more about this. Alvaro, please tell us more.
My background is in product, in design, in UX. I started as a UX designer and UX strategies at IBM, but then I quickly transitioned into data and product management, and at Procore, I’m leading the growth team.
One of the things that we’ve really been pushing for is that instead of hiring external firms, UX and products should get more comfortable discussing revenue and owning revenue targets. So part of this hot take is just about breaking down the fear that product and the product organization, in general, should not be measured by how much revenue they need to bring to the company.
In fact, I think that once you start on product-led growth, that is the main thing that you need to consider, and UX needs to get good at, including incorporating that type of research in their day-to-day practice.
And so maybe just a little bit of introduction about myself. I mentioned I’m a Director of Product Management, Growth at Procore. Something interesting is that I own a restaurant, a chicken takeout restaurant here in Austin, Texas, and we’re just about to open, so it’s a little bit of the entrepreneur side. I own that with my husband, and we’re pretty excited about that, but you know, owning restaurants is a completely different type of business than technology.
I hope that with this presentation, what I convince teams is that, hey, if you already have a UX team, that’s great. If you just have your product managers and your designers, they can be equipped to ask the right questions and conduct the type of research that you need to start understanding that the products you’re building are not just driving delivering value to those customers, but they’re actually going to convert those customers into paying customers, which is ultimately what we want.
All right. So, where did it start? It started when we were doing willingness to buy here at Procore. Prior to this research, we hired organizations to come and do the same thing, and you know, there’s a lot of work that these organizations do. They come back with a report that says, “Hey, here’s how much you need to charge, and here are the features that you need to offer,” but that gets stale pretty quickly.
First of all, it’s really hard to disseminate that information to your product team and for them to actually own the information and act on that information. So not only do you spend a lot of money, but if you don’t do the work of transferring that information to your product team so that they internalize it, that entire research that your outside firm did is just not gonna work.
The best thing to do is to empower your product team to actually understand how to ask questions to customers so that they can understand if they’re delivering value with those products that you’re building but also if your customers are willing to pay for that value.
So first, UX and product don’t have the expertise to discuss money with customers. I think that that is something that we should just forget. We all should have the expertise, and you don’t really require expertise. The question is pretty straightforward, “Would you purchase this if we deliver the value that you’re expecting?”
The second one is building something customers need is better or greater than focusing on building something customers are willing to pay for. I’m generalizing by saying that many product teams or UX teams will say that is a fact, that they’re just concerned about delivering value and that the money will come in some other way, and it’s just the sales organization that needs to deal with that. But I think that’s something that we also need to debunk. I think building value is not enough. Building products that customers are willing to pay for is what we’re here to do.
The third one which I was explaining is that an external firm can produce better insight, they may have the tools to produce more sophisticated information and gather insights that may have more backing in data or whatever methodology they’re doing, but at the end of the day, the problem with research is that if it doesn’t transfer to action then, what good is that research for? And the problem with a lot of these big deliverables that third-party firms have is that they’re really hard to consume and operationalize.
All right. So, in short, product and UX need to be responsible for revenue targets in a PLG world.
I strongly believe that is the case. I strongly believe that is the case for my team, for example. We need to get good at discovering and testing willingness to buy research because it’s no more than we own just KPIs of engagement. Yes, we still do own those KPIs, we own the funnel, acquisition targets, and activation targets, and we may own conversion targets. So we own PQL conversion rates, but we still, as a practice, don’t own the amount of revenue that we’re going to be bringing, and I think that that needs to change.
If there’s an e-commerce portion of your product and you have that e-commerce and it’s product-led growth, the product and product marketing organization–I’m talking about product at large–needs to own that revenue that comes through the e-commerce portion of your business.
So in practice, what does this look like?
The product team can partner to discover the customer’s willingness to pay with three tactics. This is what we’ve implemented before, and I think it works pretty simple. I’m not here to kind of give a framework on how to do that. I think that there are many resources that you can go and read and take a look at to empower your team to ask the right questions, but I will break them down into three phases.
The first one is that we need to build an understanding of the jobs to be done and then the pain points your customers have. So probably, hopefully, many of you already doing this; many of you already have a jobs-to-be-done framework or have a framework to understand what are the three key pain points that your customers have; that when they think about buying software, your product comes to play in that competitive market where they need to make a decision on which company is going to solve those three pain points. So clarify what those are first.
Then the second thing is to create fake door tests with a call to action to join a waitlist. So once you identify those three pain points, what you’re going to be doing is you’re going to start understanding whether–if you solve those three pain points–you’re going to be in meetings with your customers, create surveys, or one-on-one interviews when you’re going to ask, “Hey, we understand that these are your pain points; if we were to solve those pain points, are you willing to pay for this solution?”
So now that is the least helpful question because if you ask somebody if they are willing to pay for something, the answer that they give is probably not the one that they will take once they are actually about to swipe the credit card. Still, it at least gives you direction on whether you’re solving the right thing.
This is all you want to do in point one. If you ask somebody, “Are you willing to pay for this?” you at least are giving them a way to say honestly if what you’re solving is valuable. You don’t really care that much about how much, although you could also have them say, “Are you willing to pay for this?”
Another question that follows up to that is what is the price point at which this starts to become too expensive. So you’re going to offer ranges of what you think your product could be, how much you can charge for, and then you’re going to understand when they think it starts to become too expensive to solve that solution.
Ideally, they’re so excited about solving that solution that they’re going to be very honest about, “Hey, I think I’m willing to pay about this amount of money if you really solve those problems.” You’re going to hear a lot of, “Well, if you really solve that–imagining that it’s a vision–I would definitely pay for it,” and that’s when you know that you’re in the right direction.
Getting better at that would be to start actually testing whether they are in the wild, without you in a meeting, if they’re actually going to take an action that gets closer to that decision. One of those is creating a fake door test with a call to action to join a waitlist.
So maybe you don’t have your e-commerce set up already, but you can create a page that shows all your features and all your bundles, and then if they’re interested, they’re going to add their emails so that you can tell them when those features are ready.
So instead of a “pay” button or “add your credit card” button, you just have a big button that says “join the waitlist.” I think that that is a growth hack exercise that many companies have done as other ways of growing their business.
This is a perfect opportunity to use something like that. Not only are you testing their willingness to pay by measuring the action of joining a waitlist because you have to give them the emails, but you’re also collecting emails that then you can use to target once you actually build your product.
The third is to ask customers to pay to be an early beta tester. So if you don’t have your product and your e-commerce, there is nothing wrong in asking them to pay to be an early participant in your beta program.
You can say it is exclusive. We just have about 100 customers or 50 customers, and for those who are willing to pay X amount of money, we are going to add them to that beta program.
so those are three tactics; I’m sure there are many more that you can implement. The whole idea is that these are all product tactics; you don’t need a sales organization to do this, and you don’t need many other resources. Product and UX need to come up with these tactics to evaluate willingness to pay.
All right. So the takeaway is that the product team needs to own revenue goals. That’s the main thing, and when we own real new goals, then we have to understand how to get to those targets.
So not only do we need to understand if we are building something valuable and we’re going to drive engagement and all of those KPIs that we’re used to measuring, but are we actually going to convert that usage into money?
And it just makes sense that the product team owns the research to achieve these goals. All right. So with that is just the Q& I hope that that was helpful to you all.
Hot Takes Live
Catch the replay of Hot Takes Live, where 30 of the top SaaS leaders across Marketing, Sales, and RevOps revealed some of their most unpopular opinions about their niche.
These leaders shared what lessons they learned and how they disrupted their industry by going against the grain (and achieved better results in the process).
Awesome, Alvaro, super interesting presentation. We have about three minutes, so I think we can squeeze in a couple of questions while we’re at it. Maybe before we start on the business stuff, what kind of chicken restaurant?
It’s a takeout with roast chicken and sides.
Like rotisserie chicken?
So my background is Portuguese, my parents are from the Azores, and that’s the go-to Portuguese takeaway, rotisserie chicken with rice and veggies and side, so I’ll have to check that out. I love them.
When you get to Austin!
I’m there often, so I’ll check it out next time I’m in town.
Cool, listen, one of the things that stuck out to me was this idea that product people, UX research people, whatever category, they need to get over this uncomfortableness talking about money or monetization and asking those questions.
Is that what you were alluding to, and how do you help them get over that?
Well, I think when you have a sales-led motion where you don’t have product-led growth, revenue is a little bit too distant from Product because is a lagging indicator. If we measure the product team by how much money sales can convert into actual money for the company and growth, we don’t know if we’re building the right thing.
So for a long time in sales B2B sales-driven organizations, Product has been just kind of detached from that revenue target, so we got very uncomfortable at talking about money because we just don’t have to, but when you introduce product-led growth then now you have to switch that mentality.
Because if you’ve worked all your career in a B2B environment sales-led environment and now you’re asking those same UX teams, those same product teams to now go and talk about money and own money, it is an uncomfortable conversation with customers because they think that or we think that that’s not what we’re there to do. So we just don’t know how to ask those questions, and we have a fear that if we ask that question, the customer is just not going to respond or is just going to not be honest about that.
That’s for sure. Well, that’s a good segue into the next question, which was related to your comment about third-party vendors going to do a better job.
And I think that really falls into two reasons that people default to that. One is to get over this uncomfortableness that we just discussed, and two is an idea that they know how to do research better or that’s their expertise; while I’m not necessarily a researched person, I don’t know how to write questions that aren’t leading or biased.
Do you think that’s one of the reasons, and again how do you get your organization to get over that?
Well, I mean, there are so many resources to write good questions. Even Survey Monkey will just tell you the right questions to ask customers and rephrase them correctly.
If you’re sending a survey, you need to ask the right questions. If you’re interviewing, you need to ask the right questions that they’re not leading questions, but I’m starting from the basis that a product organization in a UX organization at least knows how not to ask biased questions.
Now, how do you determine ranges of price? That is a little bit different, but you’re trying to come up with a number, “Hey, our product should be at 300,” you’re trying to come up with customers’ intent to purchase. If that product existed and you’re trying to get very accurate at that. And to do that, you need to include that research in a continuous research practice.
When you think about organizations externally, you’re not going to do that continuously because that’s probably going to cost you a lot of money. So you’ll probably want to bring a lot of that practice in-house. You don’t need to be as sophisticated to include in your daily practice of research some of those questions about willingness to pay.
For sure, Alvaro, we’re at time. For everyone listening, if you work in the construction industry, if you’re a general contractor subcontractor, or know anybody in that business, definitely go check out procore.com. Killer solution leader in that space, I believe, so that’s easy.
If folks listening want to connect to you, Alvaro, what’s the best way to do that?
LinkedIn. I’d say Twitter, but I’m not really active on Twitter, so if you want to reach out to me, just send me a message on LinkedIn now. I’m pretty quick at responding there.
Cool, Alvaro. Thank you so much. Really appreciate it. Speakers like you make all the difference in making Hot Takes Live a success.